* 14 new oilfields starting up over the next two years
* Technology boosts recovery rates from older fields
* Major works undertaken to improve field reliability
By Claire Milhench
LONDON, April 4 (Reuters) - New operators and better technology are set to reverse a decline in Britain's North Sea oil and gas output over the next few years, and could help the country's economy return to health.
Although output is expected to decline another 3-6 percent this year, it will rebound by almost a third by 2017 as some 50 oil and gas fields start production on the United Kingdom's Continental Shelf, industry body figures show.
Falling oil production held back growth in GDP by 0.2 percentage points last year, Office of National Statistics data showed, after acting as a drag in the previous two years.
This has damaged attempts by Britain's Conservative-led coalition government to stimulate growth, bringing the world's sixth largest economy close to its third recession in less than five years.
The government's record on economic growth will be a key factor in the 2015 parliamentary election, with the opposition Labour Party blaming austerity measures for anaemic output.
North Sea oil also underpins the global Brent crude benchmark and over the last two years, concerns about dwindling supply have dogged the market, which is seen as vulnerable to sudden price spikes when key oilfields unexpectedly go offline.
This situation will improve when 14 new oilfields off the UK coast start production over the next two years.
By 2017, Britain's North Sea oil and gas production is forecast to rise to around 2 million barrels of oil equivalent per day (boepd), up from 1.55 million in 2012, Oil & Gas UK said, but far from the 2.7 million boepd it hit in 1999.
Industry experts say sustained oil prices of above $90 a barrel since the end of 2010 have made it possible to go after reserves that are smaller or more difficult to access.
Using new technology to boost recovery rates has been vital, as the average recovery factor for the global oil industry is only around 25-35 percent.
"Moving the recovery factor just 1 percent globally represents about 2-3 years of global production," said Juan Carlos Gay, a London-based partner at consultants Bain & Company. "So anything that improves the recovery factor of a field has a tremendous impact on production volumes."
EnQuest's Alma/Galia project, which is expected to begin producing in the fourth quarter of 2013, illustrates how new owners can extend the life of fields that are too small to be of interest to the oil majors.
This will produce 20,000 boepd at its peak, revitalising Argyll, the UK's first producing field. Argyll has been decommissioned twice due to the difficulty of extracting the remaining reserves, estimated at 34 million boe.
Oil majors have also been busy. BP's Kinnoull, which contains an estimated 45 million boe, should start feeding oil into the Forties pipeline this year, enabling the Andrew platform to remain in production to 2020 and beyond.
Gay also cited BP's development of Clair Ridge where the use of low-salinity water injection will unlock assets that have lain dormant since the field's discovery in 1977. Extracting the oil has proved tricky because of the geology, but BP's LoSal technique forces the crude to separate itself from the rock.
This will allow 640 million barrels of recoverable oil to be tapped and extend the life of the field to around 2050. BP is now looking at a potential third development phase.
This new lease of life for the North Sea, which has produced oil for four decades, follows a 30 percent fall in UK production from 2010-2012 due to problems at Total's Elgin-Franklin and Britain's biggest oilfield Buzzard, operated by Nexen.
"In the last couple of years we saw a lot of fields come offline because unreliability and unanticipated shutdowns had just grown to such an extent where it was intolerable," said Mike Tholen, economics and commercial director at Oil & Gas UK.
Between 2011 and 2012, this amounted to a loss of 1.2 billion barrels worth over $120 billion if an average oil price of $100 per barrel is taken. Tholen said major works were now being undertaken to improve the reliability of fields.
China's CNOOC, which has taken over Nexen, is fixing the Buzzard field.
China's Sinopec is helping Talisman Energy boost production at its Montrose/Arbroath field, where output had declined 14 percent per annum between 2010 and 2012 against a background of rising operating costs.
Talisman's 1.6 billion pound ($2.42 billion) project to redevelop Montrose takes advantage of tax breaks for older fields to encourage investment. Increased certainty around the tax treatment of decommissioning liabilities is also attracting new operators.
Chris Hamlet, operations and improvement manager at consultants ADIL, cited Apache's acquisition of the Forties field in 2003 as another example of a new operator boosting production from an ageing asset.
"You very rarely hear of Forties having problems now and yet that was an old asset and it was remarked at the time how bad a condition it was in," he said.
Apache is installing a satellite platform to the main Forties platform, aiming to extend the life of the field by nearly two decades. When it acquired the field from BP, production had fallen to 40,000 bpd and it was projected to cease producing in 2012.